7 IG Corporate issuers tapped the IG dollar DCM today pricing 15 tranches between them totaling $10.90b.1 SSA issuer, the Export Development of Canada, added a $500mm 2-year to the mix for an all-in IG day total of 8 issuers, 16 tranches and $11.40b.

The IG Corporate only WTD total is now 43% of the syndicate midpoint average forecast or $11.40b vs. $26.50b.

MTD, today we officially surpassed the high-, mid-point and low-end averages for March. We are more than 4% above the IG Corporate mid-range syndicate projection for all of March or $119.248b vs. $114.31b. (scroll to the table below).

The all-in MTD total (IG Corporates plus SSA) now stands at $152.158b.

Both CDX IG and HV tightened, the VIX also pulled 1 point and the S&P and DOW gained ending an 8 day losing streak – the most since 20011.

IG Primary & Secondary Market Talking Points

Ford Motor Credit Corp. today dropped the 2yr FRN tranche from its 2- and 5-year FXD/FRN having found sufficient 2yr interest in the fixed rate tranche. The other 3 tranches all launched at the tightest side of guidance.

The average spread from IPTs and/or guidance thru the launch/final pricing of today’s 15 IG Corporate-only new issues was <20.87> bps.

BAML’s IG Master Index was unchanged at +123. +106 represents the post-Crisis low dating back to July 2007.

Important Message to all “QC” readers: Before we dive into the session details re: today’s corporate debt issuance, I’d like to call your attention to a very important message from one the Fixed Income Syndicate world’s truly good people, Greg Baker of Bank of America/Merrill Lynch. Greg is going to be competing in his third 140.6 IRONMAN challenge to raise money for a critically important cause. Without further ado I will hand it over to Greg to tell you more about it.

Dear Friends,

I will be participating in IRONMAN Lake Placid on July 23rd, 2017 as part of the Multiple Myeloma Research Foundation (MMRF) Team For Cures.

The Goal:
Raise $10,000 for the MMRF
Swim: 2.4 miles
Bike: 112 miles
Run: 26.2miles

Multiple myeloma is the second most common form of blood cancer and, sadly, has one of the lowest five-year relative survival rates of all cancers. But while there is no cure, great progress is being made.

In fact, thanks to the important work of the MMRF, the world’s leading private funder of myeloma research, the FDA has approved TEN new treatments, including FOUR in just the past 18 months – a track record that’s unparalleled in the world of oncology. These drugs have almost tripled the lifespan of myeloma patients. And now the MMRF is funding over 20 additional treatments in various stages of development, giving hope to tens of thousands of patients and their families.

As Winston Churchill so eloquently put it, “We make a living by what we get, but we make a life by what we give.” Greg is giving of himself, and I ask that you please find it in yourselves to donate what you can to help this incredible cause. In the name of social responsibility, a heartfelt thank you from the guy-in-the-corner who is always in your corner.
Good luck Greg! -RQ

Why did nothing price in today’s rare non-Friday goose egg in our IG DCM? Simple! Market participants and issuers are wondering if the Trump rally will stop dead in its tracks if it cannot get an Obama Care replacement bill approved by Congress. Fractional divides within the majority controlled Republican Party reminds us all of the “circus” that is our nation’s capital known as “The Beltway.” If support is not achieved, this writer will forever refer to Washington, D.C. as “Dysfunction Junction.”

We are already living in a nation divided with the worst media wars being fought between left and right. Congress made some “headway” this morning by throwing out the minimum benefits that insurers are required to provide. The final iteration, however, may not reflect the many months that Trump and his campaign staff and advisors have had to work on a replacement plan promised to be better, stronger, more efficient and one that will save the average American lots of money, while upgrading their care and keeping their choice of doctors. Anything less than that and it will be perceived as a failure. The session expected an announcement from House Speaker Paul Ryan – it did not happen. A vote was expected this evening – it will not happen. The vote on legislation has officially been delayed. Discussions will be ongoing, beginning this evening in the House at 7:00 pm ET. Markets awaited today’s healthcare/legislative conundrum with the eagerness with which it typically saves for FOMC Press Conferences. That’s the kind of impact this decision and how it is handled will have.

Unfortunately, and further underlying all the suspense, is the real story of political dysfunction within the GOP. A new, improved Obama Care seems to be taking a back seat to the question “will the Freedom Caucus continue to agitate any progress within the party?” If so, it will mean a long and painful 4-year term for the Trump Administration, likley result in a loss of seats in the next election and potential control of his ability to effectively govern. Without support from within his own party effectively means no control at all. This is all about breaking the party’s House Freedom Caucus, comprised of 20+ Republicans who have been a thorn in the side of any Republican headway. For now, however, just getting support for whatever bill is being rushed through is challenged to find the necessary 215 votes for its passage. The legacy of Trump’s legendary negotiating ability – recall his book “The Art of the Deal” – is also being called into question as he faces off with the nation’s lawmakers.

For the more objective Trump supporters, this could be a major disappointment and usher in more toxic additives to the “swamp” that Trump has promised to drain. The main issue here, however, is that as important as Trump’s first real litmus test is to keep his promises on a full repeal and replacement of Obama Care is that he and his Administration will not be able to focus on any other plans unless and until he overcomes this first major hurdle. If it fails, President Trump’s ability to achieve his eagerly anticipated and market moving tax reduction plan will be questioned and a financial crisis of confidence could likely ensue. Perhaps the ultimate deal maker is working on health care concessions in return with a sledge hammer of a tax reduction plan. We’ll have to wait and see. I do think we could see a CT10-year below 2.00% again in short order, after which issuers will gladly hop off the fence in unison and act on a more clear view of rate direction. Robust issuance will be the flavor of the day, but first, we could see a quiet period in our primary markets. We’ll know more tomorrow when I send out the Friday “QC” featuring the syndicate world’s “Best and the Brightest” and their views and comments on next week’s IG Corporate issuance. So, stay tuned it will be a critically important read for all of you. For today and in conclusion, “Dysfunction Junction” is why our IG DCM was stalemated today.IG Primary & Secondary Market Talking Points

So what happens on a Monday ahead of the FOMC Rate Decision, the Bank of England, the Bank of Japan, Trump’s 2018 budget, the expiration of the U.S. debt ceiling suspension, BREXIT’s triggering via Article 50 and the eagerly watched Dutch elections and the chance of up to as much as two feet of snow in the Tri-State area tomorrow? Well I suppose one could call that a lot of things but I choose to call it a “front-loaded” week as a result………

…….and today’s IG dollar DCM agreed as 8 Corporate issuers priced 17 tranches between them totaling $18.30b with a major boost from The State of Kuwait’s $8b two-part 5s/10s that brought today’s impressive all-in IG day totals to 9 issuers, 19 tranches and $26.30b.

Here are some interesting volume talking points from today’s session:

The WTD total is now 73% of this week’s syndicate midpoint average forecast or $18.30b$24.83b.

MTD, we’ve now priced 67% of the IG Corporate mid-range projection for all of March or $77.425b$114.31b.

Today’s all-in IG day total (IG Corporates plus SSA) of $26.30b represents the 11th highest day of all-time.

The session’s $26.30b is the second highest volume day of 2017– and we have had a lot of biggies YTD!

After only one day, this week’s $26.30b already ranks as the 9th busiest week of 2017.

Today’s $11b 5-part Verizon Communications transaction is the 4th largest issue of the year.

Shout Out to Team Citigroup for Honoring IWD

Today, our good friends at Citibank N.A. issued a 2yr FXD/FRN in honor of International Women’s Day (“IWD”), which was last Wednesday, March 8th. IWD is a global day celebrating the social, economic, cultural and political achievements of women among others. So, today it was a privilege and an honor to step aside and watch as Team Citi once again showed why they have been and continue to be a leading force for diversity in our IG dollar DCM. Congratulations to the continued collective team efforts of everyone at Team Citi! The nation’s oldest Service Disabled Veteran broker dealer sends its five-star salute to each of you and as well as to all the women in our world and lives. The seven featured Women-Owned diversity broker dealer/investment banks on today’s Citibank N.A. “IWD” deal were:

L. King & Associates

CAPIS Institutional Services, Inc.

Lebenthal & Company LLC.

MFR Securities, Inc.

Siebert, Cisneros Shank & Cop., L.L.C.

Telsey Advisory Group

Tigress Financial Partners

Why would the financial industry’s oldest minority broker-dealer owned/operated by Service-Disabled Veterans tout competing minority broker-dealers? Well, I’d ask “why wouldn’t we?!” Firstly, its the right thing to do! Second, it provides us the opportunity to showcase one of the global capital market’s leading and cutting edge D&I initiatives, while tipping our hat to the leading women in our diversity space. So, congratulations for the glass ceilings raised and doors that Citigroup has helped open at their own financial institution through their own incredible procurement initiatives, as well as externally for all these leading women-owned firms. We extend a hardy congratulations to the respective women of D&I in our financial services industry. All for one, and one for all!

So, where do all these ideas originate? A good place to start looking is from the top down at Citigroup. Today I would suggest looking first in the office of one Suni Harford….

Who is Suni Harford?

Suni Harford, Citigroup

Suni Harford is a Managing Director and Citigroup’s Regional Head of Markets for North America. In this capacity, Suni oversees the North American sales, trading and origination businesses of Citi’s securities and banking franchise. Citi maintains a premier position across all of its fixed income, currency, equity and commodities offerings. In addition to her current responsibilities, Suni is a member of Citi’s Pension Plan Investment Committee, and a Director on the Board of Citibank Canada. Suni is also the co-head of Citigroup’s global women’s initiative, Citi Women.

Prior to her current assignment, Suni was Citi’s Global Head of Fixed Income research, where she was responsible for Citigroup’s credit analytics, research strategy and fixed income quantitative analytics efforts globally. Suni also had oversight of Citi’s premier fixed-income analytics platform, The Yield Book. From 1995-2004, Suni served as the co-head of Citi’s Fixed Income Capital Markets origination business, where she managed relationships with financial institutions.

Not that she doesn’t have enough on her plate, Suni also serves on the Board of Directors of The Depository Trust & Clearing Corporation, the Board of Directors of The Forte Foundation, a national, non-profit organization dedicated to increasing the number of women leaders in business, the Board of the Friends of Hudson River Park, and the Board of Taproot Foundation, a national organization engaged in skills-based volunteerism and pro-bono philanthropy. Suni is also passionate about awareness and support for our veteran community, and she is involved in many organizations in this regard. In addition to serving on the U.S. Chamber of Commerce Veteran’s Employment Advisory Council, Suni has worked with First Lady Michele Obama’s Joining Forces initiative. Suni also represents Citi as a founding member of Veterans on Wall Street, a coalition of major financial services firms established in 2010 to engage the broader industry in efforts to support our transitioning veterans. Having helped formalize Citi’s very successful Veterans Initiative, CitiSalutes, in 2009, Suni remains the senior business sponsor for the initiative.

For those not already aware of her pedigree, Suni joined Salomon Brothers in January 1993, after five years with Merrill Lynch & Co. where she was a Vice President in Investment Banking. Suni joined Merrill upon graduation from the Amos Tuck School of Business at Dartmouth College, where she received her M.B.A. Suni received her Bachelor of Science degree from Denison University, where she majored in physics and math.

So, in light of International Women’s Day and today’s honorable $2b Citibank N.A. “IWD” two-part new issue a “thank you”– not only to Suni, but to all the women in our investment grade debt capital markets and in our lives in addition to those who help perpetuate a more inclusive financial services industry.

Before I conclude, a bit of Women-on-Wall Street trivia for you from the guy-in-the-corner’s personal treasure trove –

Did you know the first ever Euro-denominated transaction ever priced in history was for the European Investment Bank? Did you know who priced it? It was a woman. Her name was Natalie Armentero of Banque Paribas Syndicate. You may not have heard her name in a while because, back in 1998 – over 19 years ago – she became the wife of the guy-in-the-corner and she now goes by the name of Natalie Quigley! Yet another smart and talented lady right there who graced our investment grade GCM opening doors and setting the bar high for many other women to follow. She also makes me one very proud and lucky guy! Her sister Marie-Therese Armentero represented Switzerland in the 1984 and 1988 Summer Olympics while currently holding numerous world swimming records for women over 40 years of age. Good stuff right there folks. Here’s to supporting strong women the world over.

Thank you also to Morgan Forester at team Citigroup for making herself accessible for me today on this.

Today’s Penske Truck Leasing Co., L.P. and PTL Finance Corporation’s 10-year 144a/REGS Senior Notes new issue opened some eyes today when it launched at +160 or 5 bps wider than +155 “area” guidance despite the fact that “area” was defined as +/-5 bps.

However, where there is bad there is good. Today’s Everett Spinco Inc. 3-year 144a/REGS Senior Notes tranche was guided in the +140 “area” with the latter defined as
+/-5 bps but launched at +130 or a nickel tighter than the tightest side of guidance!

The average spread from IPTs thru the launch/final pricing of today’s 17 IG Corporate-only new issues was <17.36> bps.

BAML’s IG Master Index was unchanged at +121. +106 represents the post-Crisis low dating back to July 2007.

…..and here’s another look at last week’s day-by-day re-cap of key primary market driver averages for IG Corporates only followed by the prior six week’s averages:

KEY IG CORPORATE
NEW ISSUE DRIVERS

MON.
3/06

TUES.
3/07

WED.
3/08

TH.
3/09

FRI.
3/10

THIS WEEK’S
AVERAGES

AVERAGES
WEEK 2/27

AVERAGES
WEEK 2/20

AVERAGES
WEEK 2/13

AVERAGES
WEEK 2/06

AVERAGES
WEEK 1/30

New Issue Concessions

<0.56> bps

<0.47> bps

5.5 bps

3.94 bps

3.33 bps

1.17 bps

<3.15> bps

<0.16> bps

<0.86> bps

<3.44> bps

<0.87> bps

Oversubscription Rates

3.19x

2.54x

2.22x

2.37x

1.92x

2.73x

3.39x

3.26x

3.76x

3.92x

3.12x

Tenors

9.93 yrs

8.68 yrs

17.99 yrs

6.58 yrs

5.21 yrs

9.65 yrs

8.04 yrs

8.37 yrs

8.03 yrs

12.04 yrs

11.60 yrs

Tranche Sizes

$843mm

$638mm

$443mm

$583mm

$275mm

$671mm

$738mm

$695mm

$744mm

$735mm

$1,311 yrs

Avg. Spd. Compression
IPTs to Launch

<21.31> bps

<18.56> yrs

<17> bps

<25.06> bps

<13.50> bps

<20.00> bps

<16.79> bps

<18.47> bps

<18.45> bps

<19.60> bps

<19.77> bps

New Issues Priced

Today’s recap of visitors to our IG dollar Corporate and SSA DCM:

Please Note: for ratings I use the better two of Moody’s, S&P or Fitch.

IG

Issuer

Ratings

Coupon

Maturity

Size

IPTs

GUIDANCE

LAUNCH

PRICED

LEADS

Citibank N.A.

A1/A+

FRN

3/20/2019

1,000

3mL+equiv

3mL+34 the #

3mL+34

3mL+34

CITI-sole

Citibank N.A.

A1/A+

2.00%

3/20/2019

1,500

+low 70s/+72.5a

+67 the #

+67

+67

CITI-sole

DCT Industrial Oper. Part.(tap) New Total: $325mm

Baa2/BBB

4.50%

10/15/2023

50

+185a

+175a (+/-5)

+170

+170

CITI/JPM/WFS

Everett Spinco Inc.

Baa2/BBB+

2.875%

3/27/2020

500

+175a

+140a (+/-5)

+130

+130

BAML/MUFG/RBC

Everett Spinco Inc.

Baa2/BBB+

4.25%

4/15/2024

500

+225a

+195a (+/-5)

+190

+190

BAML/MUFG/RBC

Everett Spinco Inc.

Baa2/BBB+

4.75%

4/15/2027

500

+237.5-250
+243.75a

+220a (+/-5)

+215

+215

BAML/MUFG/RBC

Humana Inc.

Baa3/BBB+

3.95%

3/15/2027

600

+150-155

+140a (+/-5)

+135

+135

BAML/JPM/MS/USB

Humana Inc.

Baa3/BBB+

4.80%

3/15/2047

400

+180a

+165a (+/-5)

+160

+160

BAML/JPM/MS/USB

Ontario Teachers

A1/AA

3.125%

3/20/2022

500

+112.5a

+100-105

+100

+100

GS/TD

Ontario Teachers

A1/AA

3.875%

3/20/2027

500

+137.5a

+130-135

+130

+130

GS/TD

Penske Truck Leasing

Baa2/BBB+

4.20%

4/01/2027

500

+160a

+155a (+/-5)

+160

+160

BAML/JPM/PNC/WFS (a) +1 (p)

Verizon Communications Inc.

Baa1/A-

FRN

3/16/2022

1,400

3mL+equiv

3mL+equiv

3mL+100

3mL+100

BAML/BARC/MS/RBC (a) +5 (p)

Verizon Communications Inc.

Baa1/A-

3.125%

3/16/2022

1,850

+125-130

+115a (+/-5)

+110

+110

BAML/BARC/MS/RBC (a) +5 (p)

Verizon Communications Inc.

Baa1/A-

4.124%

3/16/2027

3,250

+175-180

+165a (+/-5)

+160

+160

BAML/BARC/MS/RBC (a) +5 (p)

Verizon Communications Inc.

Baa1/A-

5.25%

3/16/2036

3,000

+230-235

+215a (+/-5)

+210

+210

BAML/BARC/MS/RBC (a) +5 (p)

Verizon Communications Inc.

Baa1/A-

5.50%

3/16/2046

1,500

+245-250

+235a (+/-5)

+230

+230

BAML/BARC/MS/RBC (a) +5 (p)

Virginia Electric & Power Co.

A2/A

3.50%

3/15/2027

750

+105a

+90-95

+90

+90

DB/JPM/WFS

SSA

Issuer

Ratings

Coupon

Maturity

Size

IPTs

GUIDANCE

LAUNCH

PRICED

LEADS

State of Kuwait

AA/AA

2.75%

3/20/2022

3,500

+100a

+85a

+75

+75

CITI/DB/HSBC/JPM/NBK/SCB

State of Kuwait

AA/AA

3.50%

3/20/2027

4,500

+120a

+110a

+100

+100

CITI/DB/HSBC/JPM/NBK/SCB

Indexes and New Issue Volume

Index

Open

Current

Change

IG27

64.547

64.853

0.306

HV27

131.025

131.490

0.465

VIX

11.66

11.35

<0.31>

S&P

2,372

2,373

1

DOW

20,902

20,881

<21>

USD

IG Corporates

USD

Total (IG + SSA)

DAY:

$18.30 bn

DAY:

$26.30 bn

WTD:

$18.30 bn

WTD:

$26.30 bn

MTD:

$77.425 bn

MTD:

$100.475 bn

YTD:

$340.508 bn

YTD:

$440.458 bn

Lipper Report/Fund Flows – Week ending March 8th

For the week ended March 8th, Lipper U.S. Fund Flows reported an inflow of $3.482b into Corporate Investment Grade Funds (2017 YTD net inflow of $29.433b) and a net outflow of $2.119b from High Yield Funds (2017 YTD net outflow of $743m).

Over the same period, Lipper reported a net inflow of $1.208b into Loan Participation Funds (2017 YTD net inflow of $9.308b).

Syndicate IG Corporate-only Volume Estimates for This Week and February

The Best and the Brightest” – Syndicate Forecasts and Sound Bites for Next Week

This Week’s IG New Issues and Where They’re Trading

Indexes and New Issue Volume

Lipper Report/Fund Flows – Week ending January 25th

IG Credit Spreads by Rating

IG Credit Spreads by Industry

New Issue Pipeline

M&A Pipeline

Economic Data Releases

Rates Trading Lab

It was a very welcome no print Friday today. It gives me an opportunity on behalf of Team Mischler to thank Microsoft, AT&T and Apple for inviting us to serve this week on their multi-tranche transactions. Thanks also to the leads who worked with us at HSBC – on Microsoft; Citigroup – on AT&T and Goldman Sachs on Apple. All greatly appreciated!

But I know why you all checked in this evening – it’s to hear what the soothsayers of syndicate say about next week’s investment grade corporate new issue volume. They all once again participated in my survey and their numbers and thoughts await you below. Next week there is a lack of any earth shattering, market moving economic data and although Fed members will be speaking here and there it opens the door for further issuance. Considering the very strong market tone that we’re going out with today in which 75% of this week’s IG Corporate new issues are tighter to MUCH tighter, I’d have to once again take the upside of forecasts. But heck, we all know you want to hear from the top 23 under writers so, let’s first re-cap the day and then it’s on to the “Best and the Brightest” that syndicate has to offer.

IG Primary & Secondary Market Talking Points

Taking a look at the secondary trading performance of this week’s IG and SSA new issues, of the 36 deals that printed, 27 tightened versus NIP for a 75.00% improvement rate while 6 widened (16.75%) and 3 were flat (8.25%).

For the week ended January 25th, Lipper U.S. Fund Flows reported an inflow of $2.657b into Corporate Investment Grade Funds (2016 YTD net inflow of $12.354b) and a net inflow of $412.595m into High Yield Funds (2016 YTD net inflow of $291.062m).

BAML’s IG Master Index was unchanged at +128. +106 represents the post-Crisis low dating back to July 2007.

Bloomberg/Barclays US IG Corporate Bond Index OAS was unchanged at 1.21. The “LUACOAS” wide since 2012 is +215. +120 is the new tight.

WTD, we surpassed the syndicate midpoint average forecast with a 2.12x bid-to-cover rate or $44.575b vs. $21.63b. (206.08%!)

February MTD we priced over nearly 14%% of the syndicate forecasts in just two days $12.57b vs. $91.96b.

All-in YTD IG Corporate and SSA issuance stands at $242.358b which simply means we are on pace to price $2.644 Trillion in 2017! HOOOAH. That won’t happen but it’s nice to put things in their proper perspective.

Here are this week’s five IG Corporate-only key primary market driver averages after the close of yesterday’s:

NICS: <0.87> bps

Oversubscription Rates: 3.12x

Tenors: 11.60 years

Tranche Sizes: $1,311mm

Spread Compression from IPTs to the Launch: <19.77> bps

Here’s how this week’s performance data compares against last week’s:

NICs tightened 2.00 bps to <0.87> bps vs. 1.13 bps.

Over subscription or bid-to-cover rates contracted by 0.17x to 31.12x vs. 3.29x.

Average tenors extended dramatically by 4.93 years to 11.60 years vs. 6.67 years.

Tranche sizes increased by $466mm to $1,311mm vs. $845mm.

Spread compression from IPTs to the launch/final pricing of this week’s 28 IG Corporate-only new issues tightened by <1.57> bps to <19.77> vs. <18.20> bps.

Spreads across the four IG asset classes widened 2.00 bps to 21.00 vs. 19.00 bps as measured against their post-Crisis lows.

The 19 major industry sectors widened 1.20 bps to 25.20 vs. 24.00 bps also against their post-Crisis lows.

Corporate America has posted earnings. Lots of issuers have exited blackouts. Next week we have a very light calendar insofar as economic data releases are concerned. Japan’s Abe meets with President Trump but that’s not until a week from Saturday. There are several Fed members that will be speaking next week but we are in a steady-as-she-goes mode and I strongly suspect a big week next week.

And now after my work and thoughts I ask you my favorite question of the week gift to you I ask, “what are your numbers and thoughts for next week’s IG Corporate new issue volume.

Thank you very much! -Ron”

The “Best and the Brightest” in Their Own Words

……..……and here are their formidable responses:*

*Responses to the QC weekly canvass of the top 23 investment bank fixed income syndicate desks are available only via direct email to distribution list recipients of Quigley’s Corner.

Syndicate IG Corporate-only Volume Estimates for Next Week

IG Corporate New Issuance

Next Week
2/06-2/10

Low-End Avg.

$23.74b

Midpoint Avg.

$24.72b

High-End Avg.

$25.70b

The Low

$15b

The High

$35b

A Look at How the Voting Brackets Broke-Out for Next Week

Next Week
2/06-2/10

1: 15b

1: 15-20b

2: 20b

3: 20-25b

9: 25b

4: 25-30b

1: 30b

1: 31b

1: 30-35b

Below please find my synopsis of everything Syndicate and Secondary from today’s debt capital markets, including the investment grade corporate bond data drill down as seen from my seat here in Syndicate, Sales and DCM.

Here is this week’s day-by-day re-cap of the five key primary market driver averages for IG Corporates–only followed by this week’s and the prior five week’s averages:

KEY IG CORPORATE
NEW ISSUE DRIVERS

MON.
1/30

TUES.
1/31

WED.
2/01

TH.
2/02

FRI.
2/03

THIS WEEK’S
AVERAGES

AVERAGES
WEEK 1/23

AVERAGES
WEEK 1/16

AVERAGES
WEEK 1/09

AVERAGES
WEEK 1/02

AVERAGES
WEEK 12/26

New Issue Concessions

7 bps

5.36 bps

N/A

<2.82> bps

N/A

<0.87> bps

1.13b bps

3.42 bps

0.85 bps

2.25 bps

N/A

Oversubscription Rates

2.68x

2.89x

N/A

3.71x

N/A

3.12x

3.29x

2.40x

2.85x

2.45x

N/A

Tenors

14.11 yrs

12.37 yrs

N/A

9.15 yrs

N/A

11.60 yrs

6.67 yrs

12 yrs

7.83 yrs

6.52 yrs

N/A

Tranche Sizes

$1,983mm

$1,179mm

N/A

$967mm

N/A

$1,311 yrs

$845mm

$1,123mm

$927mm

$859mm

N/A

Avg. Spd. Compression
IPTs to Launch

<17.22> bps

<19.54> bps

N/A

<21.88> bps

N/A

<19.77> bps

<18.20> bps

<14.69> bps

<18.77> bps

<15.27> bps

N/A

This Week’s IG New Issues and Where They’re Trading

Taking a look at the secondary trading performance of this week’s IG and SSA new issues, of the 36 deals that printed, 27 tightened versus NIP for a 75.00% improvement rate while 6 widened (16.75%) and 3 were flat (8.25%).

Issues are listed from the most recent pricings at the top working back to Monday at the bottom. Thanks! –RQ

Issuer

Ratings

Coupon

Maturity

Size

IPTs

GUIDANCE

LAUNCH

PRICED

TRADING

Apple Inc.

Aa1/AA+

FRN

2/08/2019

500

3mL+equiv

3mL+equiv

3mL+8

3mL+8

3mL+7/5

Apple Inc.

Aa1/AA+

1.55%

2/08/2019

500

+60a

+40a (+/-2)

+38

+38

34.5/32

Apple Inc.

Aa1/AA+

FRN

2/07/2020

500

3mL+equiv

3mL+equiv

3mL+20

3mL+20

3mL+17/15

Apple Inc.

Aa1/AA+

1.90%

2/07/2020

1,000

+65a

+50a (+/-5)

+45

+45

43/41

Apple Inc.

Aa1/AA+

FRN

2/09/2022

1,000

3mL+equiv

3mL+equiv

3mL+50

3mL+50

3mL+45/43

Apple Inc.

Aa1/AA+

2.50%

2/09/2022

1,500

+80a

+60a (+/-2)

+58

+58

58/56

Apple Inc.

Aa1/AA+

3.00%

2/09/2024

1,750

+100a

+80a (+/-5)

+75

+75

71/69

Apple Inc.

Aa1/AA+

3.35%

2/09/2027

2,250

+110a

+90a (+/-2)

+88

+88

83/81

Apple Inc.

Aa1/AA+

4.25%

2/09/2047

1,000

+140a

+120a (+/-5)

+115

+115

111/109

Johnson Controls Int’l. PLC

Baa1/BBB+

4.50%

2/15/2047

500

+170a

+150a (+/-5)

+145

+145

139/138

PNC Financial Services

A3/NR

FRN

8/07/2018

575

N/A

N/A

N/A

3mL+25

3mL+24/23

Standard Industries Inc.

Ba2/BBB-

5.00%

11/15/2026

500

low 5.00%
5.125

N/A

N/A

+253

254/250

US Bancorp

A3/BBB+

5.30%

PerpNC10

1,000

5.625%a

5.35%a (+/-5)

5.30%

$100.00

283/278

Province of Ontario

Aa2/AA-

2.40%

2/08/2022

2,500

MS +44a

MS +42

MS +42

+49.35

46.5/44.5

AT&T Inc.

Baa1/A-

3.20%

3/01/2022

1,250

+150a

+135a (+/-5)

+130

+130

125/123

AT&T Inc.

Baa1/A-

3.80%

3/01/2024

750

+175a

+160a (+/-5)

+155

+155

150/147

AT&T Inc.

Baa1/A-

4.25%

3/01/2027

2,000

+195a

+185a (+/-5)

+180

+180

170/168

AT&T Inc.

Baa1/A-

5.25%

3/01/2037

3,000

+235a

+225a (+/-5)

+220

+220

207/204

AT&T Inc.

Baa1/A-

5.45%

3/01/2047

2,000

+250a

+245a (+/-5)

+240

+240

229/226

AT&T Inc.

Baa1/A-

5.70%

3/01/2057

1,000

+275a

+270a (+/-5)

+265

+265

257/252

Bank of NY Mellon Corp.

A1/AA-

2.60%

2/07/2022

1,250

+90a

+80a (+/-5)

+75

+75

74/72

Bank of NY Mellon Corp.

A1/AA-

11NC10

2/07/2028

1,000

+110-115/+112.5a

+105a (+/-5)

+100

+100

97/93

Commw’th. Bk. of Australia

Aa2/NA

FRN

8/03/2018

200

N/A

N/A

N/A

3mL+35

3mL+37/35

National Rural Utilities Coop.

A1/A+

2.95%

2/07/2024

450

+85-90/+87.5a

+75-80

+75

+75

73/71

Seagate HDD Cayman

Baa3/BBB-

4.25%

3/01/2022

750

+high 200s
+287.5a

+250a (+/-10)

+240

+240

248/243

Seagate HDD Cayman

Baa3/BBB-

4.75%

3/01/2024

500

+low 300s
+312.5a

+285 (+/-10)

+275

+275

280/275

Crown Castle Int’l. Corp.

Baa3/BBB-

4.00%

3/01/2027

500

+175-180

+160a (+/-3)

+157

+157

157/155

Microsoft Corp.

Aaa/AAA

1.85%

2/06/2020

1,500

+60a

+45a (+/-5)

+40

+40

35/33

Microsoft Corp.

Aaa/AAA

2.40%

2/06/2022

1,750

+70a

+55a (+/-5)

+50

+50

47/46

Microsoft Corp.

Aaa/AAA

2.875%

2/06/2024

2,250

+90a

+75a (+/-5)

+70

+70

59/57

Microsoft Corp.

Aaa/AAA

3.30%

2/06/2027

4,000

+100a

+90a (+/-5)

+85

+85

77/75

Microsoft Corp.

Aaa/AAA

4.10%

2/06/2037

2,500

+115a

+105a (+/-5)

+100

+100

88/87

Microsoft Corp.

Aaa/AAA

4.25%

2/06/2047

3,000

+130a

+120a (+/-5)

+115

+115

106/104

Microsoft Corp.

Aaa/AAA

4.50%

2/06/2057

2,000

+155a

+145a (+/-5)

+140

+140

129/126

USAA Capital Corp.

Aa1/AA

FRN

2/01/2019

350

3mL+high30s/
+37.5a

3mL+23-25

3mL+23

3mL+23

3mL+23

IFC(tap) New Total: $750mm

Aaa/AAA

FRN

12/15/2021

250

N/A

3mL+13a

3mL+13

3mL+13

3mL+15/14

Indexes and New Issue Volume

Please note that the below index levels are as of 4:30pm ET.
*Denotes new tight.

Index

Open

Current

Change

IG27

65.548

63.605

<1.943>

HV27

138.23

138.31

0.08

VIX

11.93

10.95

<0.98>

S&P

2,280

2,297

17

DOW

19,884

20,071

187

USD

IG Corporates

USD

Total (IG + SSA)

DAY:

$0.00 bn

DAY:

$0.00 bn

WTD:

$44.575 bn

WTD:

$47.325 bn

MTD:

$12.575 bn

MTD:

$15.075 bn

YTD:

$184.958 bn

YTD:

$242.358 bn

Lipper Report/Fund Flows – Week ending January 25th

For the week ended January 25th, Lipper U.S. Fund Flows reported an inflow of $2.657b into Corporate Investment Grade Funds (2016 YTD net inflow of $12.354b) and a net inflow of $412.595m into High Yield Funds (2016 YTD net inflow of $291.062m).

Over the same period, Lipper reported a net inflow of $991.469m into Loan Participation Funds (2016 YTD net inflow of $4.760b).

It was perhaps a rather subdued IG primary market today in the U.S. but we did wind up featuring 3 IG Corporate issuers that priced 8 tranches between them totaling $4.65. SSA also assisted in boosting the volume totals as 2 issuers priced 2 tranches amounting to $3.25b. Today’s all-in IG day total is now $182.433b making it as the 3rd busiest month on record.

However, allow me to tell you about London’s European issuance where the primary market remains “hot.” What’s that mean? How about this – today, according to friend, former BNP Paribas colleague and Bloomberg Editorial Primary Market Strategist, Paul Cohen, “Europe remains in a “fill yer boots” mode across the pond. Notably, of the 151 YTD syndicated transactions, 100 of them (66%) have trended tighter vs. launch/final pricing. Despite that Europe was expecting a busy week this week they certainly did not anticipate the €32b priced in the in first two sessions. It’s staggering! Today in particular saw 10 issuers price 11 tranches totaling €27.68b making it the third largest issuance day in Europe in 3 years according to his Bloomberg records. Today’s U.K. 40-year gilt transaction amassed a record £23b in investor order interest while total demand for 3 sovereign bond new issues eclipsed €80b equivalent. Paul said the reason is that “the latest rise in underlying rates, fueled by improving macro sentiment, appears to be buoying risk appetite.” It sure does.

Currencies – USD outperformed all of the Big 5. Yesterday was the opposite.

Commodities – Big day for copper. Crude oil higher & gold lower.

CDX IG: -1.32 to 65.12

CDX HY: -5.52 to 346.69

CDX EM: -0.81 to 236.23

*CDX levels are as of 3:30PM ET today.

-Tony Farren

IG Primary & Secondary Market Talking Points

Mischler Financial served as a passive underwriter on Morgan Stanley’s $1b (40mm share) 5.85% PerpNC10 fixed-to-floating rate non-cumulative $25 par preferred Series “K” today. Thank you to MS Preferred Syndicate’s Michael “Captain Morgan” Borut for selecting Mischler as an underwriter from among the many diversity broker-dealers to choose from. It is always appreciated Mike! The transaction rated (Ba1/BB/BB+) started with IPT’s in the 6.125% “area” before tightening 25 bps to revised 5.875% “area” guidance and 2.5 bps tighter into the 5.85% launch for an impressive <27.5> of spread compression throughout price evolution.
The average spread compression from IPTs thru the launch/final pricing of today’s 8 IG Corporate-only new issues was 18.12 bps.

BAML’s IG Master Index was unchanged at +128. +106 represents the post-Crisis low dating back to July 2007.

Bloomberg/Barclays US IG Corporate Bond Index OAS was unchanged at +122. The “LUACOAS” wide since 2012 is +215. The tight is +122.

Here’s a review of this week’s five key primary market driver averages for IG Corporates only through Monday’s session followed by the averages over the prior six weeks:

KEY IG CORPORATE
NEW ISSUE DRIVERS

MON.
1/23

AVERAGES
WEEK 1/16

AVERAGES
WEEK 1/09

AVERAGES
WEEK 1/02

AVERAGES
WEEK 12/26

AVERAGES
WEEK 12/19

AVERAGES
WEEK 12/12

New Issue Concessions

0.94 bps

3.42 bps

0.85 bps

2.25 bps

N/A

N/A

<0.50> bps

Oversubscription Rates

2.60x

2.40x

2.85x

2.45x

N/A

N/A

2.41x

Tenors

8.54 yrs

12 yrs

7.83 yrs

6.52 yrs

N/A

N/A

10.67 yrs

Tranche Sizes

$1,006mm

$1,123mm

$927mm

$859mm

N/A

N/A

$708mm

Avg. Spd. Compression
IPTs to Launch

<15.61> yrs

<14.69> bps

<18.77> bps

<15.27> bps

N/A

N/A

<17.17> bps

New Issues Priced

Today’s recap of visitors to our IG dollar Corporate and SSA DCM:

For ratings I use the better two of Moody’s, S&P or Fitch.

IG

Issuer

Ratings

Coupon

Maturity

Size

IPTs

GUIDANCE

LAUNCH

PRICED

LEADS

IBM

Aa3/AA-

FRN

1/27/2020

500

3mL+equib

3mL+equiv

3mL+23

3mL+23

BNPP/CS/HSBC/MIZ/RBC

IBM

Aa3/AA-

1.90%

1/27/2020

750

+60a

+45-50

+45

+45

BNPP/CS/HSBC/MIZ/RBC

IBM

Aa3/AA-

2.50%

1/27/2022

1,000

+75a

+60-65

+60

+60

BNPP/CS/HSBC/MIZ/RBC

IBM

Aa3/AA-

3.30%

1/27/2027

500

+100a

+90-95

+90

+90

BNPP/CS/HSBC/MIZ/RBC

Jackson Nat’l. Life Glbl. Fdg.

AA/AA

2.20%

1/30/2020

400

+85a

+75 the #

+75

+75

BARC/CS/DB/MS

Jackson Nat’l. Life Glbl. Fdg.

AA/AA

3.25%

1/30/2024

500

+110a

+100 the #

+100

+100

BARC/CS/DB/MS

Tech Data Corporation

Baa3/BBB-

3.70%

2/15/2022

500

+low 200s
+212.5a

+185a (+/-5)

+180

+180

BAML/CITI/JPM

Tech Data Corporation

Baa3/BBB-

4.95%

2/15/2027

500

+high 200s +287.5a

+255a (+/-5)

+250

+250

BAML/CITI/JPM

SSA

Issuer

Ratings

Coupon

Maturity

Size

IPTs

GUIDANCE

LAUNCH

PRICED

LEADS

Nordic Investment Bank

Aaa/AAA

2.125%

2/01/2022

1,250

MS +19a

MS +18a

MS +17

+23.5

CITI/JPM/RBC/TD

Province of Quebec

Aa2/AA-

2.375%

1/31/2022

2,000

MS +46a

MS +44a

MS +43

+49.15

BAML/BMO/DB/SCOT

Indexes and New Issue Volume

Please note that below levels are as of 3:45pm ET.

Index

Open

Current

Change

IG27

66.447

65.188

<1.259>

HV27

140.44

138.89

<1.55>

VIX

11.77

11.28

<0.49>

S&P

2,265

2,282

17

DOW

19,800

19,919

119

USD

IG Corporates

USD

Total (IG + SSA)

DAY:

$4.65 bn

DAY:

$7.90 bn

WTD:

$13.70 bn

WTD:

$16.95 bn

MTD:

$130.433 bn

MTD:

$182.433 bn

YTD:

$130.433 bn

YTD:

$182.433 bn

Lipper Report/Fund Flows – Week ending January 18th

For the week ended January 18th, Lipper U.S. Fund Flows reported an inflow of $1.893b into Corporate Investment Grade Funds (2016 YTD net inflow of $8.108b) and a net outflow of $887.116m from High Yield Funds (2016 YTD net inflow of $410.884m).

Over the same period, Lipper reported a net inflow of $548.36m into Loan Participation Funds (2016 YTD net inflow of $2.745b).

Yesterday I wrote, “the session finished with only those two deals priced totaling $1.2b with a promise from the guy-in-the-corner that tomorrow WILL be a VERY busy day!” Well tomorrow is today and true to my word we had a blockbuster. I then wrote, “We are only $20.822bn away from $1 trillion in IG Corporate-only issuance YTD. Last year we set a new IG Corporate-only record by reaching the $1 trillion mark on Thursday, October 1st. (see your incoming “Quigley’s Corner” 9-30-2015). We’d shatter that record by nearly three weeks if it happens tomorrow!”

I am happy to report that we reached the $1 trillion dollar mark in IG Corporate-only volume at the earliest stage in any year, shattering last year’s record set on October 1st by 18 business days or 2 weeks and 3 days.

There remain 12 new issues in the imminent pipeline either currently road showing, about to conduct investor meetings/calls or have already wrapped those up. So, there’s plenty of business to go not counting M&A deals of which Shire looms large.

IG Corporate New Issuance

This Week
9/12-9/16

vs. Current
WTD – $23.194b

September 2016

vs. Current
MTD – $75.654b

Low-End Avg.

$35.83b

64.73%

$115.45b

65.53%

Midpoint Avg.

$36.91b

62.84%

$116.02b

65.21%

High-End Avg.

$38.00b

61.04%

$116.59b

64.89%

The Low

$30b

77.31%

$80b

94.57%

The High

$46b

50.42%

$150b

50.44%

Here’s how it looked:

Category

Totals

# of IG Corporate Issuers

12

# of IG Corporate Tranches

25

Total IG Volume

$22.194b

# of SSA Issuers

5

# of SSA Tranches

5

Total SSA Volume

$9.25b

Total Amount of All-in Issuers

17

Total Number of All-in Tranches

30

All-in Corps + SSA Amount

$31.244b

Here’s a look at some other records:

o $31.594 ranks as the 5th highest volume day in history for IG Corps plus SSA.